Closure of the innovation gap, a joint roadmap for decarbonisation and competitiveness, the reduction of excessive dependencies and increased security are the three core areas of the EU Competitiveness Compass, which President Ursula von der Leyen presented on 29 January 2025.
Drawn upon the indications of Draghi’s report, the Compass defines the political actions that will characterise the new Commission’s mandate. We summarise the main contents, specifically concerning the life sciences sector.
Core areas and horizontal enablers
Actions planned to close the gap with global competitors include, among others, supporting innovative startups, using deep technologies extensively in high-growth sectors, and encouraging their diffusion across companies and SMEs.
Among the already launched initiatives is the SME Fund 2025, a grant scheme managed by the European Union Intellectual Property Offices (EUIPO) to support the protection of intellectual property. It will run from 3 February to 5 December 2025 (link).
A EU Start-up and Scale-up Strategy should be also part of the package.
President von der Leyen announced the InvestAI initiative on 11 February 2025 (link). Its €200 billion total budget should include a new € 20 billion European fund for AI gigafactories. The announced EU Cloud and AI Development Act would support investments in extensive AI infrastructure and developing complex, next-generation AI models for specific domains, including medicine and science. According to the Commission, the new gigafactories will have around 100,000 last-generation AI chips (4x more than the current standards). The Apply AI Strategy should support adopting advanced technologies into strategic sectors, including pharmaceuticals, and improving public services. i.e. in healthcare.
The Clean Industrial Deal, due to be announced at the end of February, will focus on a competitiveness-driven approach to decarbonisation based on clean tech and new circular business models. Clean Trade and Investment Partnerships will address the issue of diversification and strengthening of the supply chains. The introduction of a European preference for critical sectors and technologies in public procurement should be part of the review of the legislation on public procurement.
Horizontal enablers will aim, among others, to reduce the regulatory and administrative burden by at least 25% (35% for SMEs). The announced Omnibus proposal should simplify reporting, due diligence, and taxonomy. The proposal of the 28th legal regime is expected to reduce failure costs and address other relevant aspects of corporate law.
A Horizontal Single Market Strategy should remove barriers and modernise the governance of the overall framework. Support to the capital market should pass through the announced European Savings and Investments Union, while the Union of Skills should support education and training from a life-long perspective. A new Competitiveness Coordination Tool should allow for closer coordination between the Commission and Member States in implementing the different policies at the EU and national levels.
Planned actions to support innovation
Innovation is key in life sciences, including pharmaceuticals, biotech and medical technologies. A new European Innovation Act should facilitate innovative companies’ access to the EU’s research and technology infrastructures. It should also include intellectual assets from publicly funded R&I and regulatory sandboxes to test new ideas.
The European Research Area Act would support R&D investment up to the 3% GDP target. Biotechs are identified among the key sectors to improve EU’s technological sovereignty and competitiveness, while the European Health Dataspace should offer a secure framework to develop and operate digital technologies. The Data Union Strategy should facilitate data sharing, both at the public and private level.
A Quantum Strategy and a Quantum Act should reduce fragmentation and align targets for quantum technologies. This sector may also impact digital encryption systems and the scanning and drug discovery technologies used in health systems.
The EU Bioeconomy Strategy aims to improve the development and use of bio-based materials, biomanufacturing, and biochemicals, which would support biotechnology in driving innovation. The European Biotech Act should focus on innovation in health technology assessment and clinical trials.
Revising the current Technology Transfer framework should allow for better dissemination of R&D results and closing licensing agreements. Strategic partnerships between manufacturing companies and startups may represent a way to increase R&D intensity and accelerate the diffusion of innovation. In this instance, the Compass announced a less bureaucratic and more strategic approach to EU research funding. Another action should see the EIB Group and private investors working at a new TechEU programme to close the financial gap and support disruptive innovation in life sciences.
The new Biotech and Biomanufacturing Hub was activated on 30 January 2025. The Hub is particularly addressed to startups and SMEs and helps them rapidly find all the information they need to develop, authorise, and bring innovative products to market. Interested parties can access the Hub through the Commission’s Your Europe web portal; it also contains information on available funding and intellectual property protection. The information refers to human and veterinary medicines, ATMPs, medical devices, biological products, and HTA procedures.
Biotechnologies are included within the Strategic Technologies for Europe Platform (STEP) Regulation, which redirected funding towards critical tech areas. Furthermore, their fundamental role should be recognised by the presence of biotechnology among the pilot cases that should be part of the Commission’s proposal to coordinate EU and member states’ policies in selected areas characterised by a clear added value to EU competitiveness.
The Commission confirmed the targets of a 90% reduction of carbon imprint by 2040 and to become a fully decarbonised economy by 2050. Tailored-made action plans for energy-intensive industries are expected to follow the Clean Industrial Deal, with a Chemicals industry package announced for the end of 2025. The package should include the revision of the pharmaceutical legislation, of the REACH regulation, and short-term measures to simplify the medical devices sector.
Comments from the industrial associations
The pharmaceutical industry associations welcomed the Competitiveness Compass positively. EFPIA supports the recognition of the role that innovation in life sciences can play and the announced simplification and coordination of the EU regulatory environment. According to EFPIA’s director general, Nathalie Moll, a dedicated office of life sciences should also be established to ensure policy coordination and regular dialogue.
EuropaBio, representing the biotech sector, welcomed the many actions specifically targeted to sustain biotech innovation and biomanufacturing. Their strategic role represents a basis for the new EU competitiveness model based on innovation-led productivity and is an essential signal for industrial confidence in Europe.
For MedTech Europe, “The message is clear: no health, no wealth”. Investing in life sciences may contribute a significant potential for boosting competitiveness across multiple sectors. MedTech Europe highlighted the need for immediate action and long-term reforms, including the MD and IVD regulations. The focus should now be on ensuring speed and unity across all actors to fulfil the many goals of the Competitiveness Compass.
